Swift Oil Company is considering investing in a new oil well. It is expected that the oil well will increase annual revenues by $120,215 and will increase annual expenses by $65,000 including depreciation. The oil well will cost $400,000 and will have a $9,000 salvage value at the end of its 10-year useful life. Calculate the annual rate of return. (Round answer to O decimal places, e.g. 13%.)
Swift Oil Company is considering investing in a new oil well. It is expected that the oil well will increase annual revenues by $120,215 and will increase annual expenses by $65,000 including depreciation. The oil well will cost $400,000 and will have a $9,000 salvage value at the end of its 10-year useful life. Calculate the annual rate of return. (Round answer to O decimal places, e.g. 13%.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Swift Oil Company is considering investing in a new oil well. It is expected that the oil
well will increase annual revenues by $120,215 and will increase annual expenses by
$65,000 including depreciation. The oil well will cost $400,000 and will have a
$9,000 salvage value at the end of its 10-year useful life. Calculate the annual rate of
return. (Round answer to O decimal places, e.g. 13%.)
Annual rate of return
%
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